§ Statement of Purpose

The View from 1776 presents a framework to understand present-day issues from the viewpoint of the colonists who fought for American independence in 1776 and wrote the Constitution in 1787. Knowing and preserving those understandings, what might be called the unwritten constitution of our nation, is vital to preserving constitutional government. Without them, the bare words of the Constitution are just a Rorschach ink-blot that politicians, educators, and judges can interpret to mean anything they wish.

"We have no government armed with the power capable of contending with human passions, unbridled by morality and true religion. Our constitution is made only for a moral and religious people. It is wholly inadequate to the government of any other." John Adams, to the Officers of the First Brigade, Third Division, Massachusetts Militia, October 11, 1798.

§ Syndicate

The View From 1776

Bernanke’s Inflationary Bust

The Federal Reserve Chairman, in the face of unequivocal contradictory evidence, clings to the Keynesian, liberal-progressive orthodoxy that pumping more money into circulation will inflate the economy into prosperity.

Posted by .(JavaScript must be enabled to view this email address) on 06/29 at 08:32 PM

What about the inflation caused by the increase in energy prices? That's got nothing to do with Keynesian policy. It has more to do with the current administration's incompetent economic policy, like its incredible deficit spending which has put great downward pressure on the dollar.

Posted by .(JavaScript must be enabled to view this email address) on 06/29 at 11:50 PM

Mr. Airth, there is no such thing as inflation caused by energy prices. Inflation is an economy-wide rise in prices as a consequence of excess money supply.

Energy prices are merely a single, or related group of prices responding to imbalances of supply and demand, albeit given an added push by the Fed's flooding the market with fiat money.

You are correct that the Bush administration's failure to veto the Republican, and now Democrat/Socialist, Congresses' pork-barreling spending has been gasoline for the fires of inflation. The Fed, however, should have been holding the money supply down to the level of real production increases and letting interest rates rise over the past seven years.

Posted by .(JavaScript must be enabled to view this email address) on 06/30 at 12:53 AM

"Mr. Airth, there is no such thing as inflation caused by energy prices. Inflation is an economy-wide rise in prices as a consequence of excess money supply."

That was said in the seventies and then it was not true. For instance, Dow Chemical recently rose their prices in chemicals and other stuff 25%, due to higher oil prices. That kind of price increase certainly adds inflation to everyday life. Higher food prices have also added to inflation and that wasn't cause by monetary policy but a variety of other reasons.

That argument is like saying Wall St. doesn't effect Main St.

Posted by .(JavaScript must be enabled to view this email address) on 06/30 at 09:24 AM

Also, the energy prices are fueled by global money supply. The U.S. is just one nation pumping money into the world market place. Look at the amounts by these other nations as their M-3 money supply joins the U.S.

Add defense even with its 12% cut and you are at almost $2.5 trillion. Entitlement spending alone is almost 1/2 the budget when you add the things in other departments like food programs in the Dept. of Ag.
* Food Stamp Program $ 55,000,000
* Food Stamp Program $ 43,360,000,000
* Commodity Assistance Program $ 70,000,000
* Commodity Assistance Program $ 15,000,000
* Nutrition Programs Administration $ 150,000,000
* Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) $ 6,100,000,000
* Child Nutrition Programs $ 17,000,000
* Child Nutrition Programs $ 14,495,000,000
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The government is borrowing money which has put trillions into the global market and oil, being sold in dollars is where many nations are trying to get rid of their dollars instead of buying more debt. We have serious problems because of money we are sending all over the world that is used to buy oil and other commodities sold in dollars.

We also have deflation here at home because more dollars are being sent overseas than into our economy. Our wages are stagnant, we have an over supply of homes, and people are driving and spending less because of deflation here at the same time prices of imports and commodities go up.

Like it has nothing to do with speculation, the weaker dollar, and increased demand outstripping supply.

Posted by .(JavaScript must be enabled to view this email address) on 06/30 at 09:49 AM

The weaker dollar is because of too many dollars. As you know, the dollar's value is based on supply and demand for the dollar. The more dollars in circulation the more demand has to be created to keep the value up. Anytime supply of dollars exceeds demand, prices go up. Speculation has little to do with oil prices other than people are speculating the Fed is going to keep pumping dollars into the world's market and those dollars will have to find a place to go.

Since oil is sold in dollars (except by Iran) then oil is a place they believe they can put dollars to keep from losing as much value. Dumpt the dollars on the OPEC members and let them figure out how to get rid of them. They are also using dollars to stock pile or buy metals, grains and real estate and companies and banks. Anything to get rid of the dollars that we are shipping to them by the hundreds of billions per month.

Money supply is the only thing that causes inflation but, the market determine which sectors that excess money goes to and that can change.

For example, excess money can flow to tech and when that ends, to housing, and when that ends to grains, metals, and oil and when that ends it will flow to something else.